The rally in Canadian grocers and drugstore stocks, which has helped drive the country's consumer sector up 16% so far this year, has waned in recent days and looks hard pressed to continue as competition from U.S. giants Wal-Mart Stores Inc. and Target Corp. only gets more aggressive, say analysts.

Consumer staples stocks south of the border may be the best place to hide from the U.S. fiscal cliff, said Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Merrill Lynch.

With just over a third of S&P 500 having reported fourth quarter earnings, roughly 66% of index members have surprised to the upside. However, earnings season has a disappointment thus far, as more than 70% of S&P companies beat analysts' expectations in recent quarters.

Dividend-paying defensive sectors like utilities, telecom and consumer staples are expected to remain highly sought-after assets in 2012 as economic uncertainty continues to play out, but the crowded trade doesn’t come cheap and for investors with an eye on value, better opportunities to generate income may lie elsewhere with two of the most maligned sectors of the past year: financials and health care.

As promising as the U.S. economic outlook appears, corporate America’s large exposure to the eurozone should raise concern for investors who own multinationals as the eurozone approaches recession and faces a potential split

Wal-Mart Stores Inc. was upgraded to overweight from neutral at JPMorgan on expectations for continued domestic sales momentum driven by the turnaround at its U.S. stores and ongoing strength at its Sam's Club retail warehouse shopping chain